On 16 June 2025 the U.S. Federal Trade Commission (FTC) entered a stipulated order requiring Paddle.com Market Limited, the London-based “merchant-of-record” payments platform serving more than 6,000 software vendors, to pay US $5 million and accept sweeping injunctive relief. Regulators said Paddle’s checkout infrastructure enabled overseas tech-support outfits—most notably Restoro-Reimage and Tech Live Connect—to siphon millions of dollars from predominantly older U.S. consumers through pop-up scareware that impersonated Microsoft and leading antivirus brands.
According to the unsealed complaint, Paddle opened hundreds of merchant accounts in its own name while secretly routing charges for unrelated third-party sellers, masking the merchants’ identities from acquiring banks and card networks. Between 2017 and 2019 alone it processed more than $11 million for an offshore scam called “PC Vark,” and overall its MoR programme generated charge-back rates that repeatedly breached the networks’ 0.9% threshold. The FTC said Paddle ignored internal warnings flagging anomalous refund requests, negative software reviews and abrupt traffic spikes indicative of fraud.
Under the court order, Paddle is permanently barred from processing payments for any tech-support telemarketer or merchants previously terminated by the card schemes, and it has 14 days to remit the $5 million judgment to the FTC’s consumer-redress fund. Future clients must undergo beneficial-ownership verification, sanctions screening and website-content review; recurring subscriptions now require “express informed consent,” clear pricing and one-click cancellation. Paddle must also automatically freeze any sub-merchant whose monthly dispute ratio exceeds 0.9% and report suspicious activity to acquiring banks within seven days.
While the financial hit equals roughly one quarter of the company’s 2024 operating loss, analysts warn that the larger cost lies in rebuilding trust with U.S. acquirers and addressing the MoR model’s systemic risk now spotlighted by regulators. The decision signals that payment facilitators are gatekeepers obliged to police underlying merchants or face liability, a precedent likely to ripple across rivals such as FastSpring and Stripe’s Atlas programme.
For investors, the case injects regulatory overhang into a firm valued at $1.4 billion in 2022 and eyeing a medium-term IPO. The episode reinforces the FTC’s willingness to pursue foreign intermediaries when U.S. consumers are harmed, broadening its reach and sharpening compliance expectations across the cross-border fintech landscape.
